Your gold jewellery in bank lockers may not be fully insured. Here's how you can truly secure it

Be it for cultural reasons, or savings for the future (marriage, children's education, etc.) or as an investment, Indian households hold a significant amount of gold as an asset. In fact, Indian households hold around 25,000 to 30,000 tonnes of gold.

Sachin Sawrikar, Founder and Managing Partner of Artha Bharat Investment, noted that divided across 24 crore census households, that works out to about 100-150 grams per household, worth ₹15 to 20 lakh at current prices. “Distribution is highly skewed, with affluent and southern households holding far more. In FY25 alone, a 35% rise in gold prices generated an estimated $750 billion in household wealth gains in a single year,” Sawrikar observed.

Further, according to a Kotak Institutional Equities research report dated 18 March, the value of gold stock with Indian households is nearing a whopping $5 trillion (i.e. 125% of GDP) and has gone up sharply in the past few months, thanks to a steep increase in gold prices. “The growth in value of household gold stock was a lot more moderate in the previous decade. The value of stock of gold with households is now a sizable 65% of the non-property stock of wealth with Indian households,” it added.

Storing gold assets: Bank lockers may not offer full coverage

Most Indians hold gold in the form of jewellery and coins, which is kept at home or in a bank locker. A secure option, bank lockers offer limited coverage for assets stored. The average rent of a bank locker, as per Reserve Bank of India (RBI) rules, is ₹5,000, and in case of loss of asset, you are covered for up to 100 times the locker rent, i.e. ₹5,00,000. This is less than the present value of four tola gold.

Sawrikar noted that customers opting for bank lockers must take into account the actionable compensation they can claim and other liabilities. “For natural disasters, bank liability is zero. Lockers still offer real deterrence through biometric access, mandatory CCTV and physical vaulting. But the locker alone is not enough,” he said.

Gibin John, Senior Investment Strategist at Geojit Investments, pointed out that banks have limited liability for the loss of items kept in lockers, as they do not evaluate or record the value of the contents stored inside them. “In such cases, jewellery insurance becomes relevant, as it protects valuable items such as gold, diamonds, and other precious stones against financial loss,” he added.

Notably, banks themselves do not provide insurance coverage for lockers due to regulatory and practical limitations. The RBI explicitly says that banks must not maintain records of locker contents, as only customers know what items are stored or removed.

How to secure physical gold?

• For investment purposes, go for gold ETFs/mutual funds: “Since bank locker charges and jewellery insurance premiums are additional expenses for customers, those who want to avoid these costs may consider investing in Gold ETFs or Gold Mutual Funds, which eliminate storage and insurance expenses and also help in wealth creation over the long term,” says John.

Deveya Gaglani, Senior Research Analyst – Commodities at Axis Securities, added that investing in gold ETFs takes care of storage risk, which is always an issue with physical gold. “The buying and selling of gold become very easy compared to physical gold. It's highly liquid, and you can get a relevant rate, which is not possible with physical gold,” he felt.

According to Sawrikar, the purpose of holding gold is what matters when making a decision. “For investors focused on returns rather than physical ownership, Gold ETFs eliminate storage risk, purity concerns and making charges, and attract no GST unlike physical gold at 3%. They qualify for long-term capital gains after just 12 months versus 24 months for physical gold,” he noted.

He added that the cost comparison is striking as ETFs typically carry a total expense ratio under 1% per annum — roughly what a household pays in jewellery insurance premiums alone. “The ETF investor gets professional custody, guaranteed purity and instant liquidity for that fee. The physical gold holder pays a similar amount just for insurance and still bears storage costs on top,” he observed.

However, Sawrikar further noted that ETFs are not wedding gifts, are not worn or pledged at a local lender. “For pure price-linked investment, particularly for younger digitally oriented investors, ETFs are the more cost-efficient route. Many households would be well served holding both: ETFs for the investment portion and physical gold for the emotional and ceremonial one,” he advised.

• For jewellery, insurance is the wise choice: Sawrikar called insurance a necessary complement, noting that while India holds the world's largest private gold stockpile, jewellery insurance penetration remains negligibly low. He outlined why this matters: “The locker cap leaves most jewellery financially exposed. Natural disasters are fully excluded from bank liability. Home-stored gold, substantial around weddings and festivals, has no institutional protection at all. At a typical premium of 0.3% to 1% per annum of insured value, the cost is modest relative to what is at stake.”

“With gold prices continuing to hit record highs, replacing stolen or lost jewellery out-of-pocket can be financially devastating for an ordinary middle-class investor,” Ashwini Dubey, Business Head – Home Insurance at Policybazaar.com, told Mint. He noted that most home insurance policies treat jewellery as part of "general household contents" and place strict sub-limits on it.

“The premium for jewellery insurance in India is generally quite affordable (often ranging around 0.5% to 1% of the total insured value annually). Indian households frequently move gold between bank lockers and their homes during wedding seasons or festivals. The constant transit creates windows of vulnerability. Having comprehensive insurance allows you to actually wear and enjoy your jewellery without the constant, stressful fear of theft or loss,” Dubey added.

• How much of a secure alternative is gold overdraft feature? Sawrikar opined that while not a substitute for insurance, gold overdraft is a “powerful liquidity and security alternative for otherwise idle gold”. He explained: “With a gold overdraft, you pledge jewellery as collateral and receive a revolving credit limit, withdrawing only what you need and paying interest only on what you use. The family retains ownership and the gold continues to appreciate without selling. Crucially, once gold is pledged with the bank, the institution becomes responsible for its safekeeping.”

He noted that this also eliminates storage costs, the need for security infrastructure and concerns over liability, effectively transferring the custodial burden away from the household. “For medical emergencies, business cash flow gaps or education costs, the gold OD does double duty: accessible liquidity and professional custody, without the emotional cost of disposal,” he added.

John concurs, noting that banks and non-banking financial companies (NBFCs) offer a gold overdraft facility instead of a conventional gold loan. “The main benefit of a gold overdraft is that you pledge gold and receive a credit limit. You can withdraw money any time within this limit, and interest is charged only on the amount actually used and for the period it is used. If you do not require a lump‑sum amount, a gold overdraft is a better option than a traditional gold loan,” he said.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.